The former Raytheon executive said it was important for defense officials to listen to industry’s concerns while still maintaining an “arms’ length business relationship to ensure that our contracts are executed as intended.”
Kendall said a draft version of the changes would be released in coming weeks to allow companies to respond with any concerns or suggestions. One aide to Kendall said the revamped guidelines would be released on Nov. 13.
Kendall said some components of the Pentagon’s first “better buying power” drive paid off, but others needed more work, including a big focus on reining in cost overruns on some hundreds of billions of dollars spent on service contracts.
He said the new document would encourage a more differentiated use of various contract types, backing off an earlier directive that resulted in far greater use of fixed price contracts with incentive fees.
Kendall said such contracts were useful early in the production of new weapons, but not while programs were still in development. “There’s a balance there,” he added.
Key elements of Kendall’s “Better Buying Power 2.0” include:
-- a continued drive to assess the long-term cost of weapons programs before they even get started, and keeping costs under control throughout the life of a program
-- assessment of the “productivity” of the Air Force, Navy, Marine Corps agencies that oversee acquisition programs, as well as the private companies that supply weapons and services
-- consideration of possible exports in initial designs of weapons, which could save money in the longer run
-- incentives for companies to perform well on programs and develop new innovations